Toilet Paper. What is Something Worth?

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Avatar for StarLord
Written by
4 years ago

Marginal pricing sets most market prices in the world these days. That is, the last buy sets the price. This is what happens big time in crypto markets, exchanges rates and the stock market. Something is only worth what the last person or 'bot' pays for it.

If bad news or fear comes into the market. Or the asset or commodity is in a downtrend then the value can just disappear. Crypto experiences this phenomena.

However, crypto also has pump and dump activity. In that moment of the pump everyone FOMOs (Fear Of Missing Out) in and the price can go up a few hundred percent.

If you are the last buyer. Thats a terrible place to be. You set the price for the whole market. But as soon as other market players don't back it up or bad news comes in, then it falls or even tumbles! Ouch! Marginal pricing can bite.

So what gives value. Speculation. Future income expectations. Or safe asset. Maybe just being early to something. Some sort of belief comes into play supporting a choice to be the marginal price setter.

Somethings have value like commodities and assets in demand that produce an income. While other things may be pyramid schemes or scams.

Is a computer worth $10, $500 or $2000? Well marginal pricing is one way to let us know what people value it. At least as one point in time.

Of course, there are other ways to price things. Fixed prices, auctions, discounting, rewards, offsets etc. And the supply side of the equation comes in too.

At the end of the day you, somebody or the government is saying what value is.

Final thoughts...

Toilet paper?! Why a run on Toilet paper during the COVID pandemic. Value? Price?

Thanks for reading. StarLord

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Avatar for StarLord
Written by
4 years ago

Comments

It is an essential commodity needed by each household, with Covid-19 outbreak and lockdown more of it is in demand. The rush could be attributed to increase in price or artificial scarcity. The same game is being played in the cryptomarket due to the hype regarding BTC halving.

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User's avatar Olad
4 years ago

You make some good points Olad. BTC and ETH making waves. Some key drivers as you mentioning creating tonnes of wealth.

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User's avatar StarLord
4 years ago

You must define what value you mean. There's the economic value and the market value. They are different.

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User's avatar Telesfor
4 years ago

Yes defining is at the heart of the question. Price and value. Its a great topic. And yes mechanisms and broader terms. Fun for sure.

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User's avatar StarLord
4 years ago

In capitalism, the worth of something is being determined by how that thing is useful for others. The price is also the question of the supply and demand.

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User's avatar Geri
4 years ago

Yep seems like some of the key drivers right there. I think i would like to add in incentives too. Seems to drive value, price and prosperity in capitalism.

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User's avatar StarLord
4 years ago

Yeah some good questions on what value is. A very philosophical topic. People need stuff but not sure what the price is to value it. I guess different market mechanisms help. Cool post.

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User's avatar Historian
4 years ago

Yeah I was amazed at the toilet paper being sold out in some places and even fights in shops over it. Shelves cleared out. Fortunately the supermarket makes the price fixed.

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User's avatar StarLord
4 years ago

Yeah well the pictures in your post are hilarious. I mean I can understand food but toilet paper seems like a less likely thing to run out. Unless people make a run on the shops. Maybe it was trendy.

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User's avatar Historian
4 years ago

Yeah I think the pictures are funny too which is why i posted them. Toilet paper token is out too and being used for games and stuff. Just to take the mickey out of the whole phenomena! :) lol

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User's avatar StarLord
4 years ago

The law of says, the higher the demand the higher the price. Not toilet paper only. All commodities goes high in prices because of its high demand by the comsumers. Covid-19 and the lockdown pushes for the high demands. And this time the seller has the pricing power whilst the buyer loose the purchasing power. But the price of commodities changes as the power is in hand of the buyer.

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User's avatar Esinu1
4 years ago

yep the higher the demand the higher the price. But funny what something is valued and how to value it. And what drives it.

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User's avatar StarLord
4 years ago

It's value because they are escecial commodities. Is needed in everyday life

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User's avatar Esinu1
4 years ago

Many are but what is the 'price'? That is the point of this post. :) I guess in your first comment you were saying the law of of supply and demand rather than the law of say.

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User's avatar StarLord
4 years ago
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